Commonhold and Leasehold Reform Hub

05 March 2025

The contents of this page are not a substitute for the legislation, government communications and professional standards referenced, which should be read and understood in full before application. The page and FAQs do not constitute any form of professional or legal advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.

Introduction

This page summarises commonhold and leasehold reform matters for consumers, RICS professionals and their clients. The summary is based on the Leasehold and Freehold Reform Act (LAFRA) (which received royal ascent on 24 May 2024), the written ministerial statement (published on 21 November 2024 by the Housing Minister), relevant statutory instruments that have been published to date and the Commonhold White Paper.

It is worth noting that currently there is not a published timetable for the introduction of all the measures in the LAFRA.

RICS will be engaging with the Ministry of Housing, Communities and Local Government (MHCLG) on the proposals and will respond to all relevant consultations. We will publish updates as and when we have more information. If you are an RICS member and would like to find out more about our work in this area, please contact knowledge@rics.org.

Updates published in March 2025

MHCLG have announced plans to reinvigorate commonhold and make it the default tenure for new build flats, banning leasehold in the future. The changes set out in the Commonhold White Paper will include:

New rules that will enable commonhold to work for all types of developments, including mixed-use buildings and allowing shared ownership homes within a commonhold.
Greater flexibility over development rights, helping developers build with confidence and maintaining safeguards for the consumer.
Giving mortgage lenders greater assurance with new measures to protect their stake in buildings and protect the solvency of commonholds – such as mandatory public liability insurance and reserve funds and greater oversight by commonhold unit owners to keep costs affordable.
Strengthening the management of commonholds, with new rules around appointing directors, clear standards for repairs, and mandating use of reserve funds; and
Providing an enhanced offer for homeowners – including requiring greater opportunities for democracy in agreeing the annual budget, clarifying how owners may change “local rules” over how a building is run and new protections for when things go wrong.

A new Code of Practice will set out how costs should be apportioned in commonhold, aimed at providing consumers with transparency and clarity. The Government is also committed to strengthening regulation of managing agents.

The government will launch a consultation later in 2025, to ban new leasehold flats and to explore the best way forward.

Updates published in February 2025

MHCLG have laid secondary legislation in Parliament to commence the measures that relate to leaseholders’ right to manage (‘the RTM’) within LAFRA.

Specifically, they will commence the following sections of the LAFRA relating to RTM:

section 49 (change of non-residential limit on RTM claims);
section 50 (costs of RTM claims);
section 51 (compliance with obligations arising under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002);
section 52 (no first-instance applications to the High Court in tribunal matters);
section 64 (restriction on recovery of non-litigation costs) insofar as it inserts section 20J of the Landlord and Tenant Act 1985 as regards the RTM.

They have also made consequential changes to RTM company voting rights via a negative statutory instrument (SI), to ensure that leaseholders will have effective control of a RTM company by having more votes than their freeholder.

These changes will mean that leaseholders in more mixed-use buildings will qualify for the RTM, gaining control over management of their building, their service charges and managing agent (if there is one), and leaseholders making claims will no longer have to pay their freeholder’s non-litigation costs for a claim.

Updates published in January 2025

In January 2025, the Housing and Planning Minister announced that he has signed regulations to remove the two-year ownership rule for leaseholders of flats to extend their lease, and leaseholders of houses to extend their lease or buy their freehold?

Written ministerial statement on leasehold and commonhold reform

On 21 November 2024 the Housing Minister published a written statement on leasehold and commonhold reform.

The statement covered existing provisions from the Leasehold and Freehold Reform Act 2024 as well as a number of new measures.

Existing provisions under the Leasehold and Freehold Reform Act

When the Leasehold and Freehold Reform Act was passed in May 2024 only the measures relating to building safety were introduced. The ministerial statement covered a number of the other provisions of the Act including:
The removal of two-year restriction on enfranchisement and lease extensions whichcommenced in January 2025.
Consultation on the Act’s ban on buildings insurance remuneration which will begin shortly.
Provisions on the Right to Manage which will commence in Spring 2025.
Consultation on valuation rates used to calculate the cost of enfranchisement premiums will take place Summer 2025. Implementation on any measures will take time due to secondary legislation and amendments to existing primary legislation.
Consultation on new consumer protection provisions for homeowners on freehold estates, and on service charges and legal costs.

Further leasehold and commonhold reform

The written ministerial statement also contained a number of measures that the government have said that they will deliver. These include:

A draft Leaseholders and Commonhold Reform Bill will be published in the second half of 2025.
Changes to ground rents which will be delivered in legislation.
A consultation on new reforms to section 20.
A White Paper on reforms to commonhold which will be published in 2025 as well as consultation on banning new leasehold flats.

Consultation will also take place on the regulation of managing agents and mandatory professional qualifications.

The Act proposes several key changes including (in summary, this list is not exhaustive):

Increasing the standard lease extension term for houses and flats to 990 years.
Lifting of the requirement for leaseholders to have owned the property for at least two years before qualifying for a lease extension or purchase of a freehold.
Removing ‘marriage value’ from the premium calculation for lease extensions.
Making it easier and cheaper for leaseholders to extend a lease or buy the freehold.
Making it easier for leaseholders to take over the management of their building – increasing to 50% the amount of commercial space that would prevent leaseholders from accessing the Right to Manage or the right to collective enfranchisement.
Removing paying for freeholder costs from leaseholders who want to exercise their right to enfranchise. Each party will now pay their own costs.
Scraping the presumption for leaseholders to pay landlords’ legal costs when challenging poor practice.
Setting a maximum time and fee for the provision of home buying and selling information.
Replacing buildings insurance commissions for managing agents, landlords and freeholders with administration fees.
Ensuring freeholders or managing agents use a standardised format for service charges.
Requiring freeholders who manage their property to belong to a redress scheme.
Banning the sale of new leasehold houses other than in exceptional circumstances.
Granting homeowners on private and mixed tenure estates rights of redress.

The Act also amended elements of the Building Safety Act 2022 affecting the application of cost recovery and remediation orders, and remediation contribution orders for defects. These measures have now been introduced and more information on building safety can be found in Cladding External Wall System FAQs.

Valuation considerations

Coverage of leasehold reform valuations can be found here. RICS also provides guidance on residential leasehold valuation for secured lending here.

The RICS UK valuation leaders forum made a statement on the valuation of residential ground rent investments in December 2023 here.

Residential service charges

Following the passing of the Leasehold and Freehold Reform Act 2024 there have been a number of questions raised about the impact on service charges and the role of the RICS Service Charge, Residential Management Code.

The Code, currently in its third edition, is under review and RICS are in the process of engaging with the Ministry for Housing, Communities and Local Government (MHCLG) over their detailed feedback. However, the introduction of the Act will see a number of changes that will have an impact on service charges, including -

A ban on insurance commissions which will be replaced by an administrative charge.
The introduction of a standardised format for service charges.
Annual service charge reports. Where variable service charges are collected and there are four or more properties in a block, the annual reports will need to be accompanied by a service charge account statement.
A right to request information on service charges from a landlord who will be required to comply.
The recovery of legal and other professional cost through the service charge where they are incurred by a resident management company (RMC) or right to manage company (RTM) in connection with obtaining remediation contributions under the Building Safety Act 2022.

All measures barring the recovery of legal and professional costs through the service charge for RMCs and RTMs in connection to remediation contributions will require secondary legislation.

King’s Speech, July 2024

Through the King’s Speech government has set out its intention to further reform the leasehold system, enacting the remaining Law Commission recommendations relating to leasehold enfranchisement and the Right to Manage.

The government has suggested it will take further steps to bring the leasehold system to an end, by reinvigorating commonhold through a new comprehensive legal framework, and consulting on restricting the sale of new leasehold flats so commonhold becomes the default tenure.

The government has also said it will tackle unregulated and unaffordable ground rents and address maintenance costs on private estates.

Frequently asked questions (FAQs)

RICS has engaged with numerous stakeholders on commonhold and leasehold reform. We have set out responses to some of the most frequently asked questions here, which will be updated periodically.

At the moment we don’t have a timetable for further legislation – primary or secondary – but we do anticipate that a draft new Bill will be tabled in the first session of the new parliament. Government have stated that they will ‘act quickly’ to implement the changes of the Leasehold and Freehold Reform Act 2024. However, given that there is likely to be consultation carried out on a number of areas that will require secondary legislation under the Leasehold and Freehold Reform Act 2024, plus the new legislation to deliver the measures covered in the King’s Speech it could take 12 months before we have all legislation in place.

Valuations are undertaken in accordance with relevant and applicable professional standards, regulation and legislation.

Valuation methods, models, assumptions and inputs are for the professional judgement of the valuer, appropriate to the terms of engagement, valuation circumstances and any relevant professional standards, regulation and legislation.

A valuation does not necessarily consider the requirements and impact of proposed legislation and processes.

The inclusion of a material valuation uncertainty (MVU) declaration in a valuation is a matter of professional judgement for the valuer, based on the individual circumstances. MVU has a specific criteria set out in VPGA 10 of Red Book Global Standards and is different from general market uncertainty, which always exists to some degree. Valuers should not be including blanket MVU declarations in valuations without undertaking proper analysis of the circumstances and coming to an informed conclusion in each case. Even where there is not material uncertainty, it is proper for the valuer to provide appropriate commentary about market conditions and relevant legal factors.

The RICS UK valuation leaders forum has put out commentary on MVU specifically in respect of residential ground rent investments, which is a unique sub-market.

Commonhold and Leasehold Reform Hub

Introduction

Updates published in March 2025

Updates published in February 2025

Updates published in January 2025

Written ministerial statement on leasehold and commonhold reform

Existing provisions under the Leasehold and Freehold Reform Act

Further leasehold and commonhold reform

Summary of the Act

Valuation considerations

Residential service charges

King’s Speech, July 2024

Frequently asked questions (FAQs)

When will further legislative changes happen?

What about the reforms that are not effective?

When will the 4th edition of the RICS Service Charge, Residential Management Code be published?

What are the current implications for valuation?

Should valuers be including a Material Valuation Uncertainty (MVU) declaration in all residential leasehold valuations?